Notice of Exempt Solicitation. Definitive Material. (px14a6g)
September 21 2017 - 12:33PM
Edgar (US Regulatory)
The Investor Case for
Lobbying Disclosure at FedEx
The International Brotherhood of Teamsters General Fund,
along with co-filer Investor Voice as representative of the Equality Network
Foundation, are urging stockholders to vote FOR Proposal 7 at the FedEx stockholder
meeting on September 25, 2017.
The proposal calls on FedEx’s Board of Directors to prepare
a report, to be updated annually, disclosing:
·
Oversight policies by the board
·
Listing of lobbying payments at the Federal and State level
·
Payments to trade associations used for lobbying
·
Membership in and contributions to any tax exempt organization
that writes and endorses model legislation
The proposal is part of an ongoing investor campaign
[i]
for greater corporate political spending disclosure. Transparency and
accountability in corporate spending to influence public policy are in the best
interests of FedEx stockholders. Without a clear system ensuring
accountability, corporate assets can be used to promote public policy
objectives which can pose risks FedEx’s reputation to
the detriment of stockholder value.
Federal Lobbying – FedEx Spends Millions Each Year
·
FedEx spent $24,946,845 in 2015 and 2016 on federal lobbying
activities.
·
And since 2010, FedEx has spent more than $106.4 million on
federal lobbying.
[ii]
State Lobbying – Information on FedEx’s Spending Difficult
to Obtain
·
Obtaining comprehensive state lobbying information is described
by an expert as “nearly impossible” given “the ‘Byzantine’ manner in which the
data is captured and made available online” which effectively buries
information at many states.
[iii]
·
In 2016, FedEx had over 120 lobbyists registered to lobby in at
least 30 states.
[iv]
·
According to a recent study that looked at disclosures from the
six states with the most robust reporting requirements, between 2012 and 2015
FedEx spent over $2.7 million.
[v]
This is not a solicitation of authority to vote your
proxy. Please DO NOT send us your proxy card as it will not be
accepted.
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·
In
California, FedEx
spent $492,188 in 2015 and 2016 on lobbying.
[vi]
·
In New Jersey, FedEx spent $110,908 in 2016 on lobbying.
[vii]
FedEx Has Its Lobbying Information and Could Easily
Report It to Stockholders
·
FedEx claims that it is already subject to extensive federal,
state and local lobbying registration and public disclosure requirements and
“that ample public information exists regarding FedEx’s political contributions
and lobbying expenditures to alleviate the concerns cited in this proposal” and
the proposal “would cause FedEx to incur undue cost and administrative burden.”
[viii]
But these arguments are disingenuous, as the information is not always readily
available; also FedEx is required to report its federal and state lobbying and
already has all of this information, so it could be readily provided to stockholders
in a single report at minimal expense.
FedEx stockholders currently have no way to know FedEx’s
trade association memberships or contributions being used to lobby on its
behalf.
·
Corporations make payments to trade associations that are used to
lobby indirectly on their behalf without specific disclosure or accountability.
·
FedEx stockholders face a trade association blind spot, as FedEx
fails to even disclose its trade association memberships, and FedEx does not
disclose its trade association payments, nor the portions of these payments
used for lobbying, nor additional payments beyond dues payments that can be
used for lobbying.
·
Trade associations spend hundreds of millions of dollars to
lobby. For example, the Chamber of Commerce spent more than $103 million on
lobbying in 2016 and has spent more than $1.3
billion
on lobbying since
1998.
[ix]
·
The Chamber of Commerce strongly opposes disclosure, going so far
as to claim that disclosure is a form of silencing speech.
[x]
Reports of FedEx Trade Association’s Lobbying
·
FedEx sits on the board of the US Chamber of Commerce,
[xi]
which has spent more than $1.3 billion in lobbying
since 1998, yet FedEx’s level of funding of the Chamber is secret.
·
FedEx is listed as a member of the Business Roundtable,
[xii]
which spent $34.95 million on federal lobbying in 2015 and 2016.
[xiii]
·
FedEx also sits on the board of Airlines for America
[xiv]
and is a member of the American Trucking Associations,
[xv]
which together spent over $15 million on federal lobbying in 2015 and 2016.
[xvi]
·
FedEx also sits on the board of the Cargo Airlines Association.
[xvii]
·
We believe FedEx’s Chamber membership could pose reputational
risks on the issues of addressing climate change. For example, FedEx notes its
commitment to environmental sustainability on its website and its awards and
recognitions for greenest companies, commercial solar power users, eco-airlines
and climate innovation index,
[xviii]
yet the Chamber has sued to block the EPA Clean Power Plan to address climate
change.
This is not a solicitation of authority to vote your
proxy. Please DO NOT send us your proxy card as it will not be
accepted.
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ALEC & Reputational Risk
·
The proposal also asks for disclosure of payments to tax-exempt
organizations that write model legislation, which includes the American
Legislative Exchange Council, or ALEC, which is a non-profit that convenes
state lawmakers and corporations to promote model laws written by corporations.
·
FedEx
is a member of ALEC and
serves on the Commerce, Insurance and Economic Development Task Force Executive
Committee. FedEx’s membership in ALEC has attracted negative media scrutiny.
[xix]
·
ALEC has attracted negative attention for its role in promoting
bills that undermine regulations to address issues like climate change,
workplace safety and workers’ rights
.
·
Highlighting the reputational risks of third party involvement,
more than 100 companies have publicly announced leaving ALEC. This mass ALEC
exodus includes 26 of FedEx’s compensation comparison survey group companies
[xx]
:
3M, Alphabet, Amazon, AstraZeneca, Best Buy, Coca-Cola, ConocoPhillips, Deere
& Co., Dell, GlaxoSmithKline, Home Depot, Intel, IBM, Johnson &
Johnson, Mars, McDonalds, Merck, Microsoft, Nestlé, News Corporation, PepsiCo,
Procter & Gamble, Sanofi, Sprint, T-Mobile and Unilever.
Proxy advisor
ISS supports this proposal, noting:
·
“A vote FOR this resolution is warranted, as additional
information on the company's lobbying expenses and trade association
memberships, payments, and oversight mechanisms would give shareholders a
comprehensive understanding of the company's management of its lobbying
activities and any related risks and benefits.”
·
“[FedEx] does not provide comprehensive disclosure of its direct
lobbying expenses, nor does it provide disclosure of policies, activities, or
oversight mechanisms related to the company's trade association participation.
This information could help shareholders evaluate the company's comprehensive
political activities, the relative risks and benefits, and how they are being
managed by the company.”
[xxi]
Reputation:
Corporate
Reputation Is an Important Component of Stockholder Value
·
According to a Conference Board study,
companies with a high reputation rank perform better financially than lower
ranked companies. Executives also find it is much harder to recover from a
reputational failure than to build and maintain reputation.
[xxii]
·
In a 2014 Deloitte survey, 87 percent
of executives rated reputation risk as more important or much more important
than other strategic risks their companies are facing, and 88 percent said
their companies are explicitly focusing on managing reputation risk.
[xxiii]
FedEx Needs to
Safeguard Its “Very Good” Reputation and
Top 20 Fortune
Most Admired Companies Ranking
·
According to the
2017 Harris Corporate Reputation Survey
, FedEx
ranked in the top 25 of the 100 most visible companies, ranking 23.
[xxiv]
·
FedEx is also ranked among the top 20 in the
FORTUNE Most Admired Companies list.
[xxv]
This is not a solicitation of authority to vote your
proxy. Please DO NOT send us your proxy card as it will not be
accepted.
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[i]
http://www.afscme.org/news/press-room/press-releases/2016/institutional-investors-continue-to-press-companies-for-disclosure-of-lobbying-in-2016
[ii]
https://www.opensecrets.org/lobby/clientsum.php?id=D000000089&year=2017,
accessed September 19, 2017.
[iii]
Nathan Layne, “Wal-Mart improves lobbying disclosure after stockholder push,”
Reuters
,
May 13, 2015.
[iv]
National Institute on Money in State Politics,
https://www.followthemoney.org/entity-details?eid=3627
,
accessed September 19, 2017.
[v]
Heidi Welsh and Robin Young, “How Leading U.S. Corporations Govern and Spend on
State Lobbying,” Sustainable Investments Institute and The Investor
Responsibility Research Institute, February 2017, p. 30, https://irrcinstitute.org/wp-content/uploads/2017/02/Corporate-Lobbying-in-the-States-FINAL.pdf
[vi]
http://cal-access.sos.ca.gov/Lobbying/Employers/Detail.aspx?id=1143469&view=activity&session=2015
[vii]
http://www.elec.state.nj.us/pdffiles/Lobby2016/l1exp.pdf
[viii]
2017 FedEx Proxy Statement, pgs. 81-82.
[ix]
https://www.opensecrets.org/lobby/top.php?indexType=s&showYear=2016
[x]
Kenneth Doyle, “Chamber Fights Back Against Pressure to Disclose Corporate
Political Spending,”
BNA
, December 5, 2014.
[xi]
https://www.uschamber.com/about/board-directors
[xii]
http://businessroundtable.org/about/members
[xiii]
https://www.opensecrets.org/lobby/clientsum.php?id=D000032202&year=2017,
accessed September 19, 2017.
[xiv]
http://airlines.org/about-us/board-of-directors/
[xv]
http://www.trucking.org/article/ATA-Members-Call-for-Increased-Infrastructure-Investment
[xvi]
Airlines for America: https://www.opensecrets.org/lobby/clientsum.php?id=D000000545&year=2017;
American Trucking Associations: https://www.opensecrets.org/lobby/clientsum.php?id=D000000177&year=2017,
both accessed September 19, 2017.
[xvii]
https://www.cargoair.org/about/members/
[xviii]
http://www.fedex.com/bt/about/sustainability/environment.html
[xix]
Thom Dunn, “11 Corporations You Should Protest and 2 More that Aren’t Quite as Bad
as You Thought,”
Upworthy
, October 7, 2015, available here: http://www.upworthy.com/11-corporations-you-should-protest-and-2-more-that-arent-quite-as-bad-as-you-thought;
Hannah Furlong, “70k Demand UPS and FedEx Leave ALEC, Stop Funding Climate
Denial and Animal Cruelty,”
Sustainable Brands
, December 16, 2015,
available here:
http://www.sustainablebrands.com/news_and_views/stakeholder_trends_insights/hannah_furlong/70k_demand_ups_fedex_leave_alec_stop_fundi.
[xx]
2017 FedEx Proxy Statement, Appendix A, pgs. A1-A2.
[xxi]
ISS 2017 FedEx Proxy Analysis, pgs. 30-31.
[xxii]
“Reputation Risk,”
The Conference Board
, 2007, p. 6.
[xxiii]
“2014 Global Survey on Reputation Risk,” Deloitte, p. 4.
[xxiv]
http://www.theharrispoll.com/reputation-quotient
[xxv]
http://fortune.com/worlds-most-admired-companies/list
This is not a solicitation of authority to vote your
proxy. Please DO NOT send us your proxy card as it will not be
accepted.
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